Review of Finnish online grocery retailers
As the competition in the online grocery sector in Finland is finally heating up, it is a good time to review the three main services. K-ruoka and S-Kaupat are the incumbent big online grocery services and Oda as the fast moving new entrant are included in the review.
The purpose of the review is to give an overview of the most essential elements to online grocery retailing and try to make sense how the three retailers compare with each other on each of the elements.
The review is not an all-encompassing assessment with academic rigour to point the services nor is the objective to declare a victor that is better by X points or Y% to other services. Objective is not to announce a winner.
My intention is to review how the services compare to each other and what are the biggest differences between the services. The reader can then make her/his mind which of the services is the right one to use.
The review is divided into three main groups: assortment (price included here), ordering and delivery.
Assortment
Assortments in the grocery stores in Finland have grown over the last decades to represent tens of thousands of products. One wonders whether all of the varieties of some very routine like products (such as olive oil or ketchup) are really needed.
For their online businesses, Prisma and Citymarket are consistent with the store assortments. In the online channel it is difficult to say whether Prisma or Citymarket has bigger assortment. With small screens, especially on mobile, one can't really grasp the number of products being offered.
Oda has a sizeable assortment, even though it is smaller than for the two big players. However, for online the difference is much smaller than what it would be in the stores.
It is not all about the size of the assortment. After all, Lidl is a very good place to buy groceries. One just needs to accept that some brands are missing.
Initially Oda’s assortment feels like Lidl with steroids. It is significantly bigger and is made up of known brands.
In terms of order and delivery experience, Citymarket had the best/longest dates for the products and the overall quality of the products seemed to be highest. All retailers fared very well in terms of the overall quality, but Citymarket managed to live up to its expectation of higher quality products.
Substitutions
Substitutions are one of the most relevant aspects of the overall customer experience for online grocery. All players fared quite well in terms of this aspect with Oda as a positive outlier. Oda did not have any substitutions. One of the advantages of the warehosue based model is that the retailer has a full visibility to its availability and thus the number of substitutions should be minimal.
Oda did have some products that were out of stock on the app and thus were not available for purchase. The order from Oda was done almost a week ago. As of this writing, Oda seems to have improved the out of stock levels significantly. There does not seem to be any products out of stock currently.
Prisma had substituted two products, both for a cheaper alternative.
K-Citymarket had substituted the bread for an in-house bakery version, which was about 10% more expensive. The more expensive substituted product was also charge on a higher fee.
This is something that for example in the UK the retailers have abandoned some time ago. Tesco, Asda and Waitrose all offer to substitute with a higher quality product, but promise to charge the lower price. Sainsbury's on the other hand offers to email a voucher with the difference in it. It will be interesting to how long this continues in Finland.
Price
The price comparison is done with a portion of the basket. This is, because all the orders had a variety of different products as the food needs of the family changed between the weeks when the orders were done.
The comparison is thus not an exact science, but to represent overall level where each retailer is in terms of prices. The prices vary a lot based on promotions (especially for Citymarket) and whether one prefers private lable products over branded products.
For the pruposes of this comparison, only branded products were selected and the prices have been calculated with no promotions included.
As one would expect Prisma was the cheapest in terms of the prices of the products. However, Oda was surprisingly close with only a bit more than two euros more expensive basket. Citymarket was about 14% more expensive than Prisma. It was a surprisingly big difference. Majoirty of the difference came from the price of kilo of salmon. Another area of some differences to Prisma was fruits & vegetables.
One area where the companies clearly have rather different policies are the packaging material costs:
Prisma had only one 0,6 € charge despite having several cardobard boxes and one plastic bag
Oda had a surcharge of 1,29 € for two boxes (there were more in the delivery, but two were charged)
K-Citymarket was the most expensive: 1,70€ (0,75€ per cardboard box and 0,2€ per plastic bag)
Delivery fee
Delivery fee is probably the most important single price when talking about online groceries. It is the one price nearly all customers recognise. For other product we all have our favorite products, which we know the price of. But those products differ from customer to customer. However, we all notice the delivery. fee.
For Oda the delivery was free as part of a campaign. For the comparison I added a "normal" delivery fee of 3,90€ to the comparison. Kesko and S-Group had fees ranging from 9,90€ to 12,90€
This is the most significant difference between these three retailers. And it is not a small difference.
Oda's low delivery fees are a very warm welcome to the Finnish online grocery space. Low delivery fee enables two important things:
it increases the frequency of purchase for the customer. This in turn enables faster creation of new routines and increaes the share of overall food spend.
low fees enable new customer groups to become online customers. With high delivery fees, only customers with big orders (families with children, small businesses, special occasions)
User experience in the online store
User experience is the rather difficult to measure and subjective aspect of the digital services. Thus, I won't analyse in too much detail.
The most important finding in terms of the user experience is that the overall usability of all the three main online grocery retailers is good.
After the launch of S-kaupat, S-Group has upgraded its service to match the usability of K-Ruoka. Oda is limited in terms of not having only a website. However, the usability of Oda's iOS apps (iPhone and iPad) were so good that Oda was at least as good as K-Ruoka and S-kaupat and I did not feel that I would have needed a website for buying.
For S-Group the order was mainly done via the iOS apps, whereas for K-ruoka the order was done purely via the website.
Some good elements in the services
Filtering of products is made convenient in both S-kaupat and K-ruoka
Barcode scanning is a very good feature and its usability in Oda’s app is great
Apple Pay makes buying and adding products to the order very convenient. No bank authorisation needed. This is a small, but rather important difference.
Delivery
Oda had a great variety of cheap delivery slots
The last phase of the online grocery service is very often neglected in terms of communication and the service level. Another very important aspect of the delivery is the availability and number of delivery slots.
Along with the delivery fee, the delivery was a major differentiator between Oda and the two incumbent services.
In terms of the availability of delivery slots, Oda offers 18 different slots on a weekday, seven slots on Saturdays and (as the only one of the three) seven slots for Sundays.
The best part of the delivery slots for Oda are the early morning deliveries. Oda is the first online grocer in Finland to offer deliveries before 9.00.
That is very convenient in a family with children and two working parents. At least someone is home before 8.00 and often also before 9.00. The slots of 6-8 and 7-9 are probably the new favourites in our household.
Cutoff time
There existed quite big variance with regards when the order had to be finalised.
K-Citymarket required to finalise the order (delivery 11-14) by 12.00 previous day
Oda had the cutoff time at 20.00 for an early morning delivery
S-Group had a surprisingly good service in terms of the cut off time
for a 9-12 home delivey, cut off time was 6.00 the same morning!
That is true flexibility. One has to wonder if this is the case for all orders.
After the order, the delivery process
For all retailers it is rather easy to follow how the order progresses in the delivery phase. Kesko and S-Group have a map feature to follow the driver when he/she leaves the previous customer. One can see how the car is approaching. A nice feature that was not found to be very important for our purposes. The most important information was the knowledge that the driver is now coming.
Oda does also this a bit differently. Oda's service has a dedicated space where one can see whether the order is in picking phase or in delivery. And while the order is in delivery, the service informs how many customers are in total and how many customers there are before your delivery.
After the order, the cardboard boxes
When one starts to order groceries online, two things happen. Firstly, emplty bottles pile up and secondly cardobxes fill the house. The boxes can be folded, but the traditional model of the cardboxes folds into rather large plates.
Oda's boxes are more convenient in that they can be folded into much smaller cubes. This take significantly less space.
Now someone should still take the empty bottles. Still waiting on that. 🙂
Summary
All in all, there are some small details that differ in terms of usability, but overall all services do not fall short in terms of the usability. The major differences are within the assortment and the delivery.
Kesko is best in the size and freshness of the assortment. S-Group is cheapest and almost as good in assortment. Oda is refreshingly different in many ways.
It is always good to have new entrants that make things even a bit differently. For the time being the low delivery fees, competitive product prices and broad range of delivery slots will probably keep us ordering from Oda.